Finova Group Inc. (A) Harvard Case Solution & Analysis

Finova Group, $ 14 billion of commercial financing, filed for Chapter 11 in early March 2001, in what was one of the largest U.S. bankruptcy filings of all time and the largest corporate bond default since the Great Depression. While in Chapter 11, Finova was the subject of heated debate trading. The final adopted a plan of reorganization, "Berkadia" (partnership Leucadia National Corporation and the value-investor Warren Buffett Bershire Hathaway) organized a massive recapitalization Finova, providing a secured loan of $ 6 billion to buy unsecured bank and bond creditors. In turn, Berkadia received 51% of the common stock of the reorganized company and control of the board of directors. No new business development was planned. The number of people represented in the case, however, believes that the company can be significant continuity and were concerned that Berkadia would acquire the company at an artificially low price. During the bankruptcy proceedings, most of the debt and equity claims Finova were purchased so-called "vulture investors" who hoped to influence the outcome of the case. "Hide
by Stuart C. Gilson, Perry L. Fagan Source: Harvard Business School 25 pages. Publication Date: January 22, 2002. Prod. #: 202095-PDF-ENG

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